Small And Midsize Distributors And The Opportunity To Ignite Supply Chain Value

Karen Lynch

Part 8 of the “Digitally Transforming Industries” series

The entire wholesale distribution market is at a defining moment that can mean the difference between business success and failure. Technological advancements are creating massive upheavals in customer expectations. Industry lines are blurring. New forms of competition are surfacing – from overnight startup sensations to unanticipated business models. And now, e-commerce giants are casting a long shadow that is threatening the potential for sustainable prosperity.

For small and midsize wholesale distributors, such realities threaten every aspect of the firm, especially cash flow. The recent IDC industry brief, “Wholesale: Small and Midsize Firms Are Using Technology to Sharpen Business Practices and Improve Customer Engagement,” noted that “effective management of both payables and receivables is critical, with a particular focus on chargeback management and identifying every opportunity to generate revenue.” In fact, 51.7% of wholesalers with less than 1,000 employees cite cash-flow improvement as a top priority.

Many firms rely on expanding into new regions, driving down costs, and improving cash flow as reliable initiatives to increase revenue. However, in my interactions with functional leaders from small and midsize distributors, I find those firms that succeed are the ones that integrate business-to-business (B2B) customer processes and add value throughout their clients’ supply networks.

Understand disruption to become the disruptor

Increasingly, B2B wholesale buyers are demanding interactions that are as smooth as e-commerce shopping experiences. Yet, there is one distinct difference: B2B customers do not have time to browse a Web site all day long. For the most part, they already know what they want; they just need accessible channels to place their orders quickly and reassurance that their requests will be delivered as expected.

Juggling the processes required to deliver such an experience may be challenging. But if done well, the results can be just as lucrative. By understanding the opportunities new ways of doing  business — processes, people, technology, mergers and acquisitions, and government regulations — can bring, firms can disrupt the competition.  They can embrace change to innovate a customer experience that drives revenue and ensures consistent cash flow.

Take for example Prime Meats, an Atlanta-based distributor of gourmet meat, poultry, and seafood. Amidst a period of surging popularity, the business realized that it needed a flexible, comprehensive platform to keep operations moving smoothly and anticipate each customer’s needs. By building a delivery routing and costing module within an enterprise resource planning system, designed specifically for small and midsize businesses, Prime Meats gained a level of operational visibility, control, and customer service that allowed sales reps and the warehouse to take immediate action and serve customers better. Streamlined processes and instant access to customer data allowed the company to adapt to new customer queries and opportunities to ensure the right inventory is stocked and delivered at the right time. More important, improvements in revenue growth and cash flow were significant – 20% higher profitability and 30% faster financial close cycles.

Bring revenue growth closer to the customer experience

A deeper understanding of customer transactions, behaviors, and needs is critical in any industry – and small and midsize wholesale distributors are no exception. Tailored experiences add value to the sales interaction as well as to the customer’s supply chain. And inevitably, the wholesaler is rewarded with long-term loyalty and sales growth.

Despite the potential for sustainable revenue, the overall industry has traditionally been slow to adopt digital technology. But this traditional mindset seems to be evolving according to IDC’s industry brief, where over half (53.6%) of wholesale firms cited advanced technology as a competitive differentiator.

Delivering the needs of every customer requires business processes that are integrated and fully aligned with every channel – from an e-commerce site and field rep interactions to showroom floors and warehouse offices. By coupling technology with the end-to-end customer experience, firms can build a foundation that enables them to take advantage of new opportunities such as the ease of e-commerce, the global reach of business networks, and anything new or different that customers demand.

To learn how your business can better prepare for the digital economy, check out IDC’s industry brief, sponsored by SAP, “Wholesale: Small and Midsize Firms Are Using Technology to Sharpen Business Practices and Improve Customer Engagement.” Be sure to check every Tuesday for new installments to our blog series, “Digitally Transforming Industries,” to explore the various leadership roles in today’s growing small and midsize companies.

Karen Lynch

About Karen Lynch

Karen Lynch is the Vice President, Global Wholesale Distribution Industry Business Unit at SAP. She sets the vision and direction and execute the go to market plan to address the needs of Wholesale Distributors across the globe by using SAP solutions.